Canberra’s auction clearance rate falls below 60 per cent: Domain Auction Report

Canberra’s auction clearance rate fell below 60 per cent in June for the first time since April 2020, new Domain data has revealed. 

The Domain Auction Report revealed that Canberra’s auction clearance rate had the largest monthly and annual change of all the capital cities, dropping from 67.9 per cent in May this year to 59.6 per cent in June. This time last year, Canberra had an 81.3 per cent clearance rate.

This was a 4.6 percentage point drop over the month and a 21.7 percentage point decrease from the same period a year ago.

When looking at other capital cities, all aside from Adelaide recorded clearance rates below 60 per cent for the first time this year. Adelaide took the top spot with 64.4 per cent of properties selling at auction. 

This was followed by Canberra, then Melbourne and Sydney at 53.9 per cent and 52.1 per cent, respectively. 

Domain chief of research and economics Dr Nicola Powell said there were a number of contributing factors to the decreasing clearance rates across the nation. 

“As interest rates continue to rise, borrowing capacity reduces, home loan serviceability rises, supply builds and affordability constraints impact buyers,” she said. 

“It is likely we will see an ongoing run of softening clearance rates, auction volumes and auction prices, as well as a change in seller price expectations and the availability of stock for buyers.” 

On Tuesday, the Reserve Bank of Australia lifted interest rates for the third consecutive month by a further 50 basis points to 1.35 per cent, up from 0.85 per cent.

Luton Properties director Richard Luton said the downturn in Canberra’s auction clearance rates would be temporary, adding: “We’ve still got buyers inquiring about all properties at the moment. Last weekend, we had eight auctions and sold six, which equals 75 per cent. 

“There is no doubt today’s interest rate will make some people a bit more hesitant, but there are still so many people out there looking for homes at the moment.

“The accelerating growth we had in prices last year and the amount of buyers has certainly come back.” 

Despite the monthly decrease in clearance rates, Luton said he believed auctions were still working as well as ever. 

With interest rates likely to continue rising, Luton said, “auctions [will still be] the preferred method of sale”.

“If you put a house on the market with a private treaty, you could get accepted and then have to wait another three weeks for the finance to get approved,” he said. 

“I don’t think realistically in any market we would be suggesting many private treaties. They can work for some properties … but with such a shortage of homes in most areas, [auctions] will remain the best method of sale.” 

Symon Badenoch of Badenoch Real Estate Sales said auctions provided a “clear and transparent” selling process.

“I prefer an auction as [you] can see [your] competition, whereas, with private sales, a buyer has no idea who is really bidding against you and what they are offering,” he said. 

The decreasing clearance rate is reflective of a slowing housing market, which is “not a bad thing”, Badenoch added. 

Preliminary Domain data found last weekend’s auction clearance rate fell to 49 per cent based on 43 reported auction results, of which 21 sold, 14 passed in and two were withdrawn. During the same weekend last year, Canberra recorded a 90 per cent clearance.

“The property market goes through ebbs and flows, and we have short-term memories when it comes to property,” Badenoch said. “If it kept going as it had for the last 24 months, it would be completely unsustainable.”

He said that with the changing market comes a shift in selling methods going forward, which is largely to blame for the decrease in auction clearance rates.

What causes clearance rates to fall is “the price expectations of the buyer and the seller not aligning [with each other] in a changing market”. 

“The sellers’ expectations are always a few months behind the buyers, so I expect clearance rates will rebound as sellers adjust their expectations,” he said. 

“As the market changes, sellers and agents will also be more selective in deciding to use auctions as the preferred selling method.

“Auctions are still a great way to sell, especially for those wishing to obtain an unconditional sale rather than risk an ‘under offer’ period.”